Construction pace soars in city and area

Construction starts of single-family homes in Calgary and area soared 29 per cent in October compared to the same month last year, says a federal agency.

Construction starts in the Calgary census metropolitan area climbed to 569 homes in October, up from 440 starts, says Canada Mortgage and Housing Corp. The census metropolitan area includes both Calgary and surrounding communities.

Employment growth, heightened net migration and fewer active listings in the competing resale market have continued to support the construction of single-family homes, says market analyst Felicia Mutheardy of CMHC. Net migration refers to the inflow minus the outflow of people.

Construction starts for single-family homes within Calgary itself also increased in October. Soil turned for 371 single-family homes, up nine per cent from 338 during the same month last year.

Outside the city, Airdrie, Chestermere and Cochrane all saw a rise in construction starts last month compared to the same time last year.

“A variety of factors may have contributed to the increase in production, such as lot availability and more subdivisions opening, along with a relative price advantage in these areas in comparison to new single-detached units within the city limits,” says Mutheardy.

The biggest increase came in Cochrane, where construction started on 62 homes, up from nine starts a year earlier. Meanwhile, construction starts in Chestermere increased to 32 homes in October — up 100 per cent from 16 during the same time a year ago — while those in Airdrie rose to 77 homes, up 32 per cent from 58.

Construction starts of single-family homes in Calgary and area also increased from Jan. 1 to the end of October, rising to 5,392 starts — up 9.5 per cent from 4,922 during the same period last year.


In terms of urban centres, Edmonton and area was second only to Calgary and area for construction starts of single-family homes in Alberta during October, a federal agency says.

There were 540 construction starts in the Edmonton census metropolitan area, which includes activity in surrounding towns, says Canada Mortgage and Housing Corp.

During the same month last year, Edmonton and area had 478 starts.


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Calgary top-rated market for overall real estate prospects – Strong economic and employment growth forecast

For the second year in a row, Calgary is the top-rated market in Canada for overall real estate prospects, according to a survey of industry experts.

Calgary kept the top spot with the highest ratings for prospects in three categories – investment, development and homebuilding, said the Emerging Trends in Real Estate report by PwC and the Urban Land Institute.

“The Calgary economy continues to post solid gains, despite the disruption caused by summer flooding,” said the report. “The energy industry, primarily oil, remains strong and will continue to benefit from economic growth around the world.

“Locally, energy and energy service companies have dominated office demand. Economic activity is being supported by growth in both the goods and services sectors. Manufacturing and construction will lead the goods sector, and personal services and transportation and warehousing are the key drivers on the service side.”

The report is based on a survey of over 1,000 industry experts including investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants.

The ratings of other Canadian cities in order following Calgary are: Edmonton, Saskatoon, Vancouver, Toronto, Winnipeg, Ottawa, Halifax and Montreal.

The report said economic activity in Calgary is projected to grow at a 3.3 per cent rate in 2013 and a 3.4 per cent rate in 2014. Employment growth is expected to slow but remain good through the end of this year and into 2014, growing at 2.4 per cent and 2.8 per cent, respectively.

“There is a lot to be positive about when looking at Calgary. It’s a city that is full of risk takers and entrepreneurs. We embrace change here,” said Joe Binfet, managing director/broker of Colliers International in Calgary.

“From a commercial real estate perspective, we have a highly-integrated transportation and logistics system in place, easy access to the U.S. Calgary is viewed as the western distribution centre for Canada.”

Binfet said that with more head offices here than anywhere else investors have access to a diverse and productive white collar workforce.

“Calgary appeals to employees and employers alike. We have a decent public transit system, a lower cost of living than Toronto and Vancouver, and a terrific quality of life,” said Binfet.

“Investors in Calgary commercial real estate see room for continued increased values as we have had the strongest performing urban economy over the last 10 years and the prospects for future growth are bullish.”


© Copyright (c) The Calgary Herald

Calgary housing boom pushing prices to all-time high – Single-family homes average more than half a million dollars

Calgary’s booming housing market is pushing average prices to record levels as single-family home sales so far this year are averaging well above half a million dollars.

“The residential real estate market is holding strong for sellers,” said Grace Yan, a Calgary realtor with RE/MAX Real Estate (Central).

“It usually slows down for Christmas season but we are realizing that it remains at a steady rise. We are still finding a shortage of listings, lots of activity with shorter days on the market. We are finding from fixer uppers, inner-city properties to turnkey luxury high-end homes in demand. We anticipate the steady market to continue to heat up for the new year.”

As of Thursday, according to the Calgary Real Estate Board, the average MLS sale price for all residential property in the city so far this year has been $457,123. The annual record is $428,649 set last year. In 2004, average sale prices in the city were $227,269.

So far this year, the average MLS sale price for a single-family home is $517,598. The annual record price of $481,259 was set last year. In 2004, the average was $251,558.

On Friday the Canadian Real Estate Association released its latest MLS data for October showing that Calgary had the best year-over-year gain in the country in the MLS Home Price Index.

CREA said prices in Calgary, for homes tracked by the index, rose by 8.17 per cent from last year while the national average of 11 markets surveyed was up by 3.52 per cent.

Scott Bollinger, broker with the ComFree Commonsense Network, said there was a little softness in the market last year because of the introduction of tighter mortgage rules.

“But the Calgary numbers we’re seeing today show this is the strongest and healthiest housing market since the 2006 boom,” he said. “That said, this isn’t the boom — and that’s a good thing. 2006 was marked by some things we’re not seeing today — a massive inventory crunch, irrational exuberance and confidence that the market would stay strong indefinitely, and almost unthinkable economic growth. We saw six and seven per cent growth in 2006.

“Our economy today is growing at a nice, measured, healthy rate — three, three-and-a-half per cent. So we’re still seeing confidence, but it’s not the same extreme. There’s a collective memory in this city of the boom, so I think this strength we’re seeing is more sustainable. Houses are still selling quicker, but they’re nowhere near the frenzied pace we saw in 2006, when the average time on market dipped to 20 days.”

In October, Calgary had 2,510 MLS sales, up 19.3 per cent from last year. Alberta registered 5,588 sales, up 16.1 per cent, and Canada had 39,039 MLS sales for an annual hike of 8.3 per cent.

Average sale prices in October and their year-over-year increase were: Calgary, $436,216, 4.2 per cent; Alberta, $377,084, 3.8 per cent; and Canada, $391,820, 8.5 per cent.

Calgary’s real estate market is showing no signs of slowing down in November. Month-to-date including Thursday, there have been 830 MLS sales in the city, up 34.30 per cent from the same period a year ago, according to CREB. The average sale price has also climbed by 7.47 per cent to $463,126.

Doug Porter, chief economist with BMO Capital Markets, said there are two notable splits developing in Canada’ housing market – larger cities are hot, while smaller cities are generally not, and sales in the West are strong, but are weakening in much of the East.

“When judged by total sales volumes, a measure that combines both price changes and the number of units sold, the hottest markets this year are Calgary, Edmonton, and, against all expectations, Vancouver,” he said. “All three have reported double-digit volume increases, the only cities in that category.”


© Copyright (c) The Calgary Herald

How much home can you afford? – Saving a down payment is often the biggest hurdle

The first step in determining the price you can afford to pay for a home is to get a clear picture of your current financial situation.

Be aware of your monthly payments on any loans or credit cards, and of your total gross (before taxes) monthly household income.

Lending institutions follow two simple affordability rules to determine how much you can pay.

The first affordability rule is that your monthly housing costs shouldn’t be more than 32 per cent of your gross household monthly income.

In this case, housing costs are considered to include monthly mortgage payments, property taxes and heating expenses — known as P.I.T.H. for short.

For a condominium, P.I.T.H. also includes half of the monthly condominium fees.

Lenders add up these housing costs to determine what percentage they are of your gross monthly income.

This figure is known as your gross debt service (GDS) ratio. Remember, it must be 32 per cent or less of your gross household monthly income.

The second affordability rule is that your entire monthly debt load shouldn’t be more than 40 per cent of your gross monthly income. This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.

This will tell you what your maximum monthly payments should be. But the home price you can afford depends on several other factors, too.

Specifically, these are the amount of your down payment and the current interest rate.

For most people, the hardest part of buying a home — especially your first one — is saving a down payment.

Many people will not have 20 per cent of the purchase price to put down. With mortgage loan insurance, though, you can purchase a home with less.

Mortgage loan insurance protects the lender. By law, most Canadian lending institutions require it.

The way it works is if the borrower defaults on the mortgage (fails to pay), the lender is paid back by the insurer. The cost for this type of insurance can be paid in a single lump sum, or it can be added to your mortgage and included in your payments.

Most mortgage loan insurance products require homebuyers to provide the down payment from their own resources, such as savings and RRSPs. Gift down payments from immediate relatives are also acceptable.

For down payments of less than 10 per cent, CMHC enables lenders to offer homebuyers the flexibility to use additional sources of down payment, such as borrowed funds or lender incentives.

Once you’ve made the necessary calculations, rounded up a down payment and feel you are ready to obtain a mortgage, it’s a good idea to get pre-approval.

This means that a lender will look at your finances to establish the amount of mortgage you can afford. At that time, the lender will give you a written confirmation or certificate quoting a fixed interest rate, good for a specific period of time.

Having a pre-approved mortgage amount makes the search for your new home much easier and less time-consuming, because you have a price in mind.

Some of the things you will need to have with you the first time you meet with a lender are:

Your personal information, including picture identification;

Details about your job, including confirmation of salary in the form of a letter from your employer;

Your sources of income;

Information and details about bank accounts, loans and debts;

Proof of financial assets;

Source and amount of down payment and deposit;

Proof of source of funds for closing costs (these are usually between 1.5 per cent and four per cent of the purchase price) .

Trouble qualifying?

Your calculations may show that you will have trouble meeting the monthly debt payment on the home you want, and that you will likely have trouble getting approved for a mortgage.

Here are some things you can do:

Pay off some loans first;

Save for a larger down payment;

Revise your target house price;

Meet with a credit counsellor who can help you minimize your debts;

Buy your home through a rent-to-own program provided by the builder, a non-profit sponsor or a government sponsor.

Your credit rating

Before approving you for a mortgage, lenders will want to see how well you have paid your debts and bills in the past.

To do this, they get a copy of your credit report. This provides them with information on your financial past and use of credit.

Before your lender sees your credit history, get a copy for yourself to make sure the information is accurate. Contact one of the two main credit-reporting agencies, Equifax Canada Inc. or TransUnion of Canada, to get your credit report. (There may be a fee for this.)

If you have no credit history, it is important to build one. One way is to apply for a standard credit card, make small purchases and pay for them as soon as the bill comes in.

If you have bad credit, lenders might not want to give you a mortgage until you can re-establish a good credit history by making debt payments regularly and on time.

Most unfavourable credit information, including bankruptcy, is dropped from your credit file after seven years. If you have bad credit, you may want to consider credit counselling.

Despite a poor credit history, you might still be able to get a mortgage loan if you have a family member willing to be a guarantor or co-signer on the loan.

This person must meet the lender’s borrowing criteria, including good credit history, and is legally obligated to make the mortgage payments if you do not.

Excerpted from Canada Mortgage and Housing Corp.’s Homebuying Step by Step
© Copyright (c) The Calgary Herald